Equity mining is a tool that has reached a significant level of use in the auto dealership industry, but its potential falls short — dramatically short. The best that can be said of equity mining is that it is merely the tip of the iceberg when it comes to today’s technology. To really pack the most punch from your sales program, you need to dissect your dealership into six profit centers, then implement a specific data-mining program in each one to deliver the highest profit possible.
Sounds difficult? It really isn’t. With the right tools, data mining can be used to find more customers in “deeper corners” of your database than you may have known. Why mine only one area when so many others also offer great opportunities?
Today’s consumer shopping patterns make it difficult for dealerships to maintain past marketing programs. But this is actually good news, because traditional marketing programs are expensive. With today’s sophisticated data-mining tools, coupled with consumer profiling, dealers can now know when a specific customer is in the market, and therefore deliver the right targeted message. Anything else is merely guessing. This is why data mining leads to more sales than any third-party source, and why developing the right processes at your dealership is key to efficiency and success.
The six profit centers we’ll talk about here are retail, leasing, used car, service drive, F&I and service conquest:
Retail — Data mining for cars a specific number of months into the contract is a profitable way to keep in front of the customer. We know that most car buying decisions are based on the monthly payment, with payments commonly stretching out to 72 months. But do you have to wait until then? No. In fact, statistics show that you’re more likely to lose a customer if you wait until the end of the contract, and that the sweet spot actually is around 30 months for many owners. By then, the car has lost its “newness,” it still has good trade-in value and the new models will naturally sport features that were not previously available. This is an ideal time to mine for retail customers.
In addition, retail customers with vehicles having major repairs or some upcoming repairs can be ideal candidates for upgrades. Being able to keep the payment at or near the current levels is often all that is needed to make the sale.
Leasing — Leases are typically 36 or 48 months, and many people are ready to trade out once they’ve reached the 16th month. Beyond watching for lease trade-outs and grabbing customers’ attention before someone else does, data mining can find customers who are facing mileage penalties, then provide solutions to prevent out-of-pocket expenses. Mileage alerts are one of the highest-converting alerts on the market. Helping customers avoid paying penalties improves CSI scores and boosts customer retention.
If your dealership is new to the leasing market, data mining can help you find and convert contract-term customers who may be interested in upgrading every 24 months. Leasing may appeal to customers who don’t want to keep buying new but do want to keep driving new — to get all the latest technology, a full warranty, etc.
Used Car — While the off-lease vehicles are hitting the market in droves, this makes the used car folks happy since they are often getting high-quality, certified pre-owned cars. Data mining is an excellent source of finding front-line-ready vehicles. When a customer is looking for a specific model, use data mining to look at your current base of customers first, to see if there are likely candidates to upgrade cars. At the same time, use data mining to quickly find likely buyers for those cars.
Data mining is a proven method of lowering the inventory turn and increasing profits. Data mining for used car sourcing will benefit both sides (buying and selling) and keep a plentiful supply of high-quality cars.
Service Drive — When is the best time to visit with a customer? How about when they are already in your store, and you can have a face-to-face conversation? Relationships can be built very quickly in that manner.
Technology exists that will pull data every five minutes from your CMS and give you the best real-time information on your customers. For example, you’ll know instantly if that customer is nearing a lease expiration, if the repairs might persuade the customer to trade up or if any mileage penalties are looming. Your staff will be alerted as to when that customer is in the service drive to ensure the customer is reached and provided with the right offer. Your salesperson can have a specific conversation with a customer in service when armed with the right data. In addition, the cashier at RO payout can print out an offer for each customer, ensuring that you reach 100 percent of your customer base.
F&I — This segment is suited for alerts as warranties are nearing expiration. Customers actually appreciate this, and it is an opportunity to build goodwill. It is also a great opportunity for customers to trade up to a new vehicle. Another benefit is being able to remarket to customers who didn’t initially want to finance. Data mining can also help F&I compare different retail, lease and cash-back opportunities.
Service Conquest — Did you know that service-drive conquesting is one of the best ways to drive incremental sales? These customers haven’t purchased a vehicle from your dealership, but they do trust in the service drive. Studies show this typically could be 5,800 customers in a typical dealership. Data mining strategies for conquest can run the full gamut from new vehicles to service drive specials to searching for specific used cars.
Again, data-mining sales conversions happen at a much higher rate than any third-party source. Data mining that follows a process and is used in all six profit centers of a dealership has multiple benefits, including improved customer retention, a boost to CSI scores, higher profit margins and the lowest acquisition cost vs. traditional and digital sources. By viewing each department in your dealership as its own profit center, you’ll see it in a new light that can open doors to better revenue.